Goldman Fires Two Employees

Goldman Sachs Group Inc. fired two employees after one of them allegedly shared confidential information stemming from the Federal Reserve Bank of New York's supervision of another bank.

In a memorandum to employees, Goldman executives wrote Wednesday that a junior investment-banking employee had sent in September a document to colleagues that included sensitive bank-supervisory information. That junior banker and a more senior co-worker who failed to alert his supervisors were terminated following an internal investigation, Goldman said.

The Goldman executives told employees the firm's policy explicitly prohibits an employee's use of materials and information from previous employers.

"That policy," they wrote, "explicitly states that "work or any proprietary or confidential information should not be brought into the firm or used by you or disclosed to others at the firm without the express permission of those previous employers.'"

The junior banker had joined the firm from the New York Fed 10 weeks earlier, according to the memo.

"The firm has been in regular communication with government regulators and enforcement authorities and is assisting their investigations," Goldman's John Rogers and Jake Siewert wrote in the memo.

A more senior Goldman employee reported the incident, which was reported earlier Wednesday by the New York Times, to the division's compliance unit, and its general counsel alerted the New York Fed, they wrote.

The junior banker worked in the investment-banking division's financial-institutions group and advised regional banks, a person familiar with the matter said. The Goldman investigation found he had sought and received the confidential information from a current New York Fed employee, the person said.

"As soon as we learned that Goldman Sachs suspected one of its employees may have inappropriately obtained confidential supervisory information, we alerted law enforcement authorities," the New York Fed said in a statement. "We have been working with law enforcement authorities since then. Because any public statement about the investigation could be prejudicial to a potential future criminal case, we are unable to comment on the specific facts that are under investigation."

The episode came to light as a Senate committee prepares to scrutinize banks" influence over their regulators following accusations by a former New York Fed examiner that Goldman interfered with her oversight of the firm.

The former regulator, Carmen Segarra, had sued the New York Fed and two supervisors last year for wrongful termination, had secretly recorded conversations with her colleagues that reveal allegations that some of Ms. Segarra's bosses passed on opportunities to confront Goldman on issues the regulators" staffers had with the firm.

On Friday, the Senate Banking Committee will host a hearing that features an appearance by William Dudley, a former Goldman executive who is now president of the New York Fed.

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